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Star Media STARMEDIA (ID: Star_Media1)

, Author: Never, reproduced by Odaily with authorization.

For the first time in the 40 years of confrontation between the United States and Iran, the situation is difficult to control.

On January 8, Iran's Islamic Revolutionary Guard Corps attacked the U.S. al-Assad air base in Iraq with at least six rockets. Affected by Iran's latest retaliatory actions, stock prices, gold prices, oil prices, and currency prices all soared. At the opening of the stock market, individual stocks in the gold and oil sectors rose one after another, and Zhongman Petroleum directly rose by the limit. International spot gold has reached the $1,600 mark for the first time in the past seven years. In November, Iran's increase in oil prices caused panic. At the same time, on January 8, the price of Bitcoin in Iran experienced a serious premium. The price of a Bitcoin was as high as 36,000 US dollars, which was 3.5 times higher than the global average price. The global Bitcoin also surged by 7.8%, breaking through 8400, Approaching 8500, standing firm at 8000.

Previously, the United States had imposed economic sanctions on Iran. And on January 3, the U.S. air raid on Baghdad Airport killed General Qasem Soleimani, head of the elite Quds Force (Qds Force) of the Iranian Revolutionary Guards, completely angering Iran. Subsequently, Iran stated that it would "retaliate" against the United States, withdraw from the Iran nuclear agreement, and even offered a reward of 80 million US dollars to kill US President Trump. In the end, Iran used 6 missiles to show its might to the United States.

Before the war, due to the economic sanctions imposed by the United States, the Iranian economy was already on the verge of collapse. The value of the Iranian French currency, the rial, has plummeted, and domestic inflation is serious, making people miserable.

Bitcoin is a non-sovereign currency, and in the face of the aggressiveness of the United States, it has aroused the interest of many anti-American countries. In the digital age, distributed blockchain ledger technology has endowed countries with the ability to issue sovereign cryptocurrencies, and has also added many uncertain variables to international political disputes.

But can Iran succeed?

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US imposes 'terrorist' sanctions on Iran

Iran, also known as Persia, or the Islamic Republic of Iran, is a sovereign state in West Asia and one of the wealthiest countries in Asia. But in recent days, the tension between the United States and Iran has once again paralyzed Iran.

U.S. President Trump has always been in power with "nervous" tactics. After taking office in early 2017, he has imposed economic and political pressure on the Middle East and the Asia-Pacific region.

In May 2018, U.S. President Trump announced his withdrawal from the Iran nuclear agreement signed by the Obama administration to suspend sanctions against Iran (Joint Comprehensive Plan of Action (JCPOA), also known as the Iran Nuclear Agreement), which was signed in 2015 by Iran, the United States, China, France, Germany, Russia, the United Kingdom and the European Union. Subsequently, the United States imposed diplomatic isolation on Iran and launched a series of "strict economic sanctions", doubling sanctions on Iran's oil industry, and imposing sanctions on its non-energy sectors such as finance, technology, automobiles, and aircraft.

The United States has completely blocked the Iranian economy.

The Iranian economy is almost entirely dependent on the oil export industry, and the oil sanctions have directly led to a 10-year regression of the Iranian economy. Iran's crude oil reserves account for about 10% of the world's oil reserves, and the country and its national income mainly depend on crude oil exports. Before Trump's sanctions, Iran's oil product exports accounted for the top seven countries in the world's oil exports. According to data released by OPEC, Iran exported nearly 2 million barrels per day in 2016. After being sanctioned, Iran's oil exports dropped sharply to 230,000 barrels per day, a year-on-year decrease of 90%. At the same time, Iran's petrodollar revenues have plummeted, with the Iranian regime losing billions of dollars in revenue each year.

The U.S. attack on Iranian oil was made possible because of the existence of the U.S. dollar in the global currency hegemony system. The most serious US sanctions against Iran are to order SWIFT (Society for Worldwide Interbank Financial Telecommunication) to cut off all support for Iran. The US used consecutive sanctions to make SWIFT obedient and launched sanctions against Iran. SWIFT is currently the most important global financial information exchange network for financial institutions, which is equivalent to an exchange hub for cross-border payments and international financial information. In international trade, the U.S. dollar is the currency used in most international transactions, and transaction transfer technology also relies heavily on the SWIFT system. As long as the United States cuts off Iran’s SWIFT system, it can cut off Iran’s petrodollar revenue path and achieve the goal of oil sanctions. This also means that the Iranian government is also restricted in dollar settlement in the field of buying dollars, issuing sovereign debt and other commodities such as gold.

Oil and US dollars directly determine the lifeline of Iran's economy, and the short supply of petrodollars immediately triggered a chain reaction at home and abroad in Iran.

First, the huge amount of revenue lost by the government is the main expense that its Islamic Revolutionary Guard Corps-Quds Force spends on supporting Hezbollah, Hamas, and others.

Second, because Iranian businessmen cannot receive payment in US dollars, all products produced in Iran are difficult to export. Again, prices in Iran have soared, with an inflation rate as high as 48%, and prices of vegetables and meat have increased by more than 100%. The Iranian people are miserable.

The maximum pressure actions taken by the Trump administration have directly led to a major economic downturn in Iran, and this is a vicious cycle of sanctions and retaliation. The more sanctions the United States imposes, the more sabotage and terrorism the Islamic nationalists in the Middle East will engage in. And Trump said that as long as the sabotage continues, the sanctions will remain in place.

Iran's economy is in shambles.

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Iran Uses Blockchain to Save the U.S. Emperor

Under the triple blow of international political isolation, US economic sanctions, and severe domestic inflation, the entire Iranian nation is restless like ants on a hot pot.

At the beginning of 2019, Iranian President Hassan Rouhani (Hassan Rouhani) publicly stated on national television: "Today, the country is facing the largest scale of pressure and economic sanctions in the past 40 years."

First of all, the Iranian government started with strict foreign exchange control. However, the continuous inflation in Iran has made people's lives increasingly difficult. Prices have risen sharply, unemployment is serious, and people's real income and purchasing power have fallen sharply. When trade was cut off and foreign exchange was controlled, the local people began to frantically buy gold and bitcoins as a hedge, and they scrambled to exchange their currencies into gold and bitcoins.

It is understood that Iranian residents have spent about 2.5 billion US dollars to buy bitcoin, with an average daily bitcoin transaction volume of up to 10 million US dollars, and the transaction volume of encrypted exchanges has also hit a record high. "Things are rare and expensive".

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(Coin.dance latest data)

The economy is sluggish, and the Iranian people rely on cryptocurrency mining and transactions to earn a certain amount of income to make ends meet. According to a survey by Gate Trade, more than a third of people earn between $500 and $3,000 through mining, and 58% of investors earn income through cryptocurrency transactions.

In response, a CoinDesk reporter said: “Demand for bitcoin will be far greater in struggling economies than in first-world economies.”

But in reality, it is not easy for Iranians to trade bitcoins. Because, most international trading platforms require KYC, but after receiving the KYC certification, they all prohibit Iranians from trading because of their prejudice against Islam. To this end, many Iranians have had to use VPNs to circumvent discrimination by buying foreign IDs on the black market. Or, they implement ICO activities through the encrypted social software Telegram.

The Iranian people are not the only ones looking for cryptocurrencies as a life-saving straw. Under the pressure of sanctions from the United States, the Iranian government has also chosen to use cryptocurrencies to find another way to get rid of the financial hegemony control of the US dollar. Although it was extremely opposed to cryptocurrencies and blockchains before 2018, the Iranian government has changed its attitude in the face of the dollar’s ​​troubles, and regards cryptocurrencies and blockchains as the last straw to save Iran.

Previously, the Iranian government had been opposed to Bitcoin, cryptocurrency and mining. However, in the last month of 2019, Iran made a sudden 360° turn. It not only revoked the previous ban on the mining industry and ICO, but also proposed to issue its own fiat cryptocurrency. The purpose is to fight against the United States.

In fact, as early as March 2018, Iran had already begun to seek a way out for the "monetization" of oil exports, but there has been no result.

Iranian President Hassan Rouhani said: "The Muslim world should develop measures to get rid of the dominance of the dollar and the US financial system."

In the global monetary system based on the US dollar, the only non-sovereign currency that can bypass the US dollar is the cryptocurrency.

One of the benefits of digital currencies is the "absence of U.S. regulators" and the ability to circumvent sanctions, according to the chairman of Iran's parliamentary economic committee.

In desperation, Iran accepted and chose cryptocurrencies. In July 2019, the Central Bank of Iran (CBI) approved the release of a new cryptocurrency.

Shahab Javanmardi, CEO of FANAP, an Iranian information and communication technology (ICT) company, revealed: “Iran’s cryptocurrency will be backed by gold, but its function will be similar to other cryptocurrencies. The encrypted asset is to maximize the use of Iran’s frozen banking assets.” .”

At the same time, Iran is also using blockchain technology to secretly organize its allies, and plans to use the blockchain to get rid of the SWIFT system. At present, Iran and other countries with a "complex relationship" with the United States are creating a financial system independent of the hegemony of the United States through the node consensus of the blockchain. Iran is creating a seamless blockchain platform to build a network covering Iran A money transfer network between and its allies. In this regard, Iran first received the support of Russian President Vladimir Putin.

Putin said in November 2019: Russia is "actively cooperating" with partners to establish a financial system completely independent of SWIFT without specifying partner countries.

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Is Bitcoin really a lifesaver?

As the saying goes, "the ideal is full, but the reality is skinny".

Is the encryption path that Iran believes to be the perfect way to circumvent US regulation, really work?

We know that Iran is not the first country to choose the blockchain revolution. Countries subject to economic sanctions by the United States, such as Russia, Iran, Venezuela, and Argentina, all pin their hopes on cryptocurrencies. Obviously, Iran has gone down this old path again.

But among these countries, the fate of Iran and Venezuela is the most similar. As a "lesson from the past", Venezuela's encryption road to national salvation has more or less provided Iran with some references.

Back in 2017, Venezuela launched its own fiat cryptocurrency, the petro, to circumvent U.S. economic sanctions. However, Venezuela's petro currency curve to save the country was a failure.

In May 2018, the Venezuelan presidential election, the current President Nicolás Maduro Moros was successfully re-elected. In this regard, the United States stated that it did not accept or recognize it, and began to impose economic sanctions on Venezuela. Venezuela's historic internal and external troubles continue to deepen. It not only suffers from a crisis of economic downturn, but also suffers from severe hyperinflation. Venezuela's hyperinflation index reached 1 million in a short time, and a cup of coffee worth 30 cents originally only cost 450 bolivars but sold for 1 million. There is also a serious shortage of water, electricity, and public transportation in the territory. The crime rate is rising steadily, and citizens are forced to leave the country. This has put enormous pressure on Maduro's governance.

Maduro believes that these chaos all originated from the economic war launched by the United States.

In order to save Venezuela, whose life is hanging by a thread, the desperate Maduro decided to "save the country with a blockchain curve" and use cryptocurrencies to evade US sanctions. On August 20, 2018, Venezuela officially issued the petro currency Petro, implemented the currency system of "dual legal currency merger", abolished the old currency, issued the encrypted legal currency petro currency and the new bolivar at the same time, and linked the two official currencies , used in parallel, plans to conduct international trade through the Petro instead of the Bolivar.

Petro is backed by the real assets of crude oil barrels, one Petro anchors one barrel of crude oil, and is supported by the government. Maduro fixed the foreign exchange rate of the petro currency at 60 US dollars or 3,600 revalued new bolivars, and initially issued 100 million pieces.

We can see from Maduro's determination to promote the Petro. He used the petro currency as the last straw to save Venezuela, and used a strong hand to force the hungry citizens to use it. On October 1, 2018, Maduro forcibly promoted the Petro to the public. A week later, Maduro forced the payment of passports in petro coins. Since nearly 5,000 Venezuelan nationals flee on average every day, passports are the most in-demand product in this country. Committee members dare not speak out.

Maduro arbitrarily devalued the legal currency by 95%, and changed the exchange rate and price at will, bringing the already fragile Venezuelan economy to the brink of collapse and completely bankrupting the government's credit endorsement.

But soon, the petroleum currency was questioned and resisted at home and abroad.

Iran once claimed that Atapirire, a town of 5 billion barrels of crude oil, would be the most powerful support for the oil currency. But the local residents said: "There is no oil production here at all!".

This shows that the 5.3 billion barrels of oil that Maduro promised to peg the Petro one-to-one does not exist at all, and there is no safe anchoring mechanism. The petro has no technology at all, and the white paper has been questioned as plagiarized from Dash. The announced total amount of ICO financing was also questioned as false.

Currently, petro has no users, no investors, no oil backing, no actual issuance, no mainstream exchanges, and no merchants accepting petro. ICO buyers just "pre-ordered" petro and did not Any petro released. Its community also expressed high levels of mistrust.

At the same time, there were also conflicts and disputes within the Iranian government. A large number of people opposed the plan, and different agencies issued contradictory statements. The Venezuelan Congress declared that the government’s issuance of the petro currency Petro violated the constitution.

Ali Divandari, head of the Institute of Monetary and Banking at the Central Bank of Iran, said in an interview that Iran’s commercial and financial transactions are too heavy to be handled by new technologies such as blockchain.

Petro was identified as an international Ponzi scheme.

Maduro's blockchain road to national salvation is bankrupt.

However, the broken window effect of Maduro’s scam continues. After the collapse of Petro, the Petro and New Bolivar ushered in a wave of selling. The two fiat currencies became waste paper, and more citizens starved to death and fled. And triggered a series of economic effects, inflation became more serious, the black market prevailed, people could not withdraw money, and global crude oil prices soared.

Compared with Russia, which has strong national strength, the blockchain revolution in Venezuela and Argentina have failed. So, will Iran succeed?

In this regard, some experts said that the central bank's digital currency is not achieved overnight. Behind it is the support of strong national strength, and it is also a contest between countries. But in the case of Venezuela and Iran, they are trying to "create an independent financial system" to counter US hegemony. However, poor and weak countries have neither the corresponding national strength to compete with the United States, nor a systematic understanding of blockchain and cryptocurrency, and these are fatal flaws.

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The United States takes the attitude of "destroying the country" against Iran

Iran is facing additional sanctions from the United States.

A series of actions related to cryptocurrencies has attracted the attention of the US government. A few months ago, U.S. regulators warned the Iranian government, accusing it of using bitcoin to circumvent international sanctions. Then came December, when a bill was introduced in the U.S. Congress to take a tougher stance against Iran’s plans to develop its own cryptocurrency. Representative Mike Gallagher and Republican Senator Ted Cruz of Texas both stated in the proposal "Blocking Iran Illicit Finance Act" that they would require reporting on Iran's progress in cryptocurrencies. In addition to calling for increased sanctions against Iran, the proposals also call for sanctions against those who knowingly provide funds, services, and "related to Iran's development of cryptocurrency" to Iran.